US Business

Investors battled to push markets higher again Wednesday following another healthy run-up on Wall Street boosted by more positive earnings results that raised hopes for the reporting season.

However, while there is a more upbeat mood on trading floors for now, analysts warned that the current rally could soon turn as central banks press on with interest rate hikes aimed at fighting multi-decade-high inflation.

In a sign of the uphill struggle in the battle against prices, the closely watched UK consumer price index jumped back above 10 percent last month owing to soaring food costs.

Forex traders were also keeping tabs on the yen as it edges closer to 150 per dollar, with Japanese officials holding off a second intervention in as many months but saying they are ready to act when necessary.

All three main indexes in New York enjoyed back-to-back gains as investors were heartened by forecast-beating results from Goldman Sachs and Johnson & Johnson.

They came on the heels of better-than-expected reports from banking giants Citi, JP Morgan and Wells Fargo.

Traders were given an extra boost by news that Netflix gained more than two million subscribers in July-September, easing worries about the impact of rising borrowing costs on consumers.

“Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream,” Art Hogan, a strategist at B. Riley, said.

“A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower.”

Still, Asian markets were mixed, with Hong Kong tanking as investors were left unimpressed with city leader John Lee’s first policy speech, which laid out plans to boost the economy but also saw a vow not to let up on a security crackdown.

There were also losses in Shanghai, Seoul, Taipei and Bangkok, though Tokyo, Sydney, Singapore, Wellington, Mumbai, Manila and Jakarta rose.

London edged down after the inflation reading and ahead of a keenly awaited Prime Minister’s Questions in parliament, the first since Liz Truss’s new finance minister tore up her controversial mini-budget that hammered markets last month.

The pound fell back below $1.13 as European trade began, having rallied in the previous two days on the government U-turn.

Paris and Frankfurt also dipped, while US futures rose.

– Dollar closes on 150 yen –

SPI Asset Management’s Stephen Innes warned there were still plenty of issues keeping a cap on equities including sticky inflation, weak sentiment, hawkish central banks, the Ukraine war, China’s economic woes and “a non-stop drum beat of recessionary rhetoric from vocal market participants”.

“The key to equity markets is (Federal Reserve) certainty, and that is the crucial turn on the road before the rates markets can settle back into a groove and Treasury volatility can decline,” he added.

“But for that to happen, the US data needs to roll over. Given the much-hotter-than-expected inflation data, the Fed may do the opposite of what the market wants — turning volatility up again.”

On currency markets, eyes were on Tokyo as the yen hovers just below 149.50 per dollar, with finance minister Shunichi Suzuki saying “we’ll respond appropriately against excessive moves”.

The unit is much weaker than the 145.90 level it touched last month before authorities stepped in, and analysts said they would likely act before it passes 150.

The yen has plunged more than 20 percent against the dollar as the Bank of Japan refuses to lift interest rates — citing a need to boost the economy — even as the Fed announces a series of bumper increases.

“If dollar-yen rises past the symbolic 150 level, price action will naturally accelerate, so they probably want to halt it before then or buy time,” said Yuji Saito of Credit Agricole CIB. 

Crude rose on renewed supply worries, having slumped Tuesday on bets that President Joe Biden would order the release of more barrels from US emergency reserves in order to keep fuel prices subdued heading into the winter and mid-term elections.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: UP 0.4 percent at 27,257.38 (close)

Hong Kong – Hang Seng Index: DOWN 2.4 percent at 16,511.28 (close)

Shanghai – Composite: DOWN 1.2 percent at 3,044.38 (close)

London – FTSE 100: DOWN 0.3 percent at 6,918.50

Pound/dollar: DOWN at $1.1290 from $1.1332 on Tuesday

Dollar/yen: UP at 149.35 yen from 149.21 yen

Euro/dollar: DOWN at $0.9836 from $0.9862 

Euro/pound: UP at 87.14 pence from 87.01 pence

West Texas Intermediate: UP 0.7 percent at $83.36 per barrel

Brent North Sea crude: UP 0.1 percent at $90.12 per barrel

New York – Dow: UP 1.1 percent at 30,523.80 (close)

British inflation jumped back above 10 percent in September on soaring food prices, official data showed Wednesday, with the country gripped by a cost-of-living crisis bedevilling the government.

The Consumer Prices Index accelerated to 10.1 percent on an annual basis, up from 9.9 percent in August, the Office for National Statistics said in a statement.

The September rate matched the level in July and is the highest in 40 years as a result also of sky-high energy bills.

“I understand that families across the country are struggling with rising prices and higher energy bills,” Britain’s new finance minister Jeremy Hunt said in a separate statement.

“This government will prioritise help for the most vulnerable while delivering wider economic stability and driving long-term growth that will help everyone.”

The government has been rocked by chaos in markets in the wake a budget that pledged tax cuts that would have been funded by state debt.

Most of those measures have since been reversed, leaving Prime Minister Liz Truss fighting to save her job.

Following widespread criticism over the budget, Truss sacked Hunt’s predecessor, Kwasi Kwarteng, after less than six weeks in the role.

Analysts said Wednesday’s data would put pressure on the Bank of England to keep raising its main interest rate by sizeable amounts.

Capital Economics noted that the BoE could hike its rate by as much as one percentage point to 3.25 percent at its next meeting in November.

– ‘Most pressing problem’ –

Victoria Scholar, head of investment at Interactive Investor, said inflation was “the most pressing economic problem facing the Bank of England as well as the government. 

“Without price stability, the cost-of-living crisis will continue to weigh on the economy by squeezing household budgets and dampening business margins.”

In a bid to help households, the government has capped domestic energy bills until April. However, the original plan was for a cap until late 2024, which Truss pulled earlier this week.

Markets were left spooked that a budget of tax cuts and a costly energy-price cap would add massively to British debt that had already ballooned on government support during the Covid pandemic.

Her budget sent the pound plunging to a record-low against the dollar and caused yields on government bonds to soar — forcing Truss into a huge budget U-turn that has calmed markets.

Following Wednesday’s data, the pound was down against the dollar and euro, while London’s FTSE 100 shares index steadied at the open.

burs/bcp/lth

Hong Kong’s leader unveiled plans to resuscitate the business hub’s fortunes on Wednesday, hoping to lure back international expertise after an exodus of talent — but he vowed no let up in a political crackdown that has transformed the city.

John Lee, a Beijing-anointed former security chief, gave a debut policy speech that prioritised the revival of an economy mired in recession and maintaining security while recognising that tens of thousands of people had left a city that serves as a gateway to China and a regional business hub.

“Over the past two years, the local workforce shrank by about 140,000,” he said. “Apart from actively nurturing and retaining local talent, the government will proactively trawl the world for talent.”

The former British colony has lately undergone its most tumultuous period since its 1997 handover to China. 

Huge and sometimes violent democracy protests three years ago were followed by a sweeping clampdown on dissent as well as some of the world’s strictest coronavirus pandemic rules, many of which remained in place long after rivals reopened.

The city, which only scrapped mandatory quarantine for international arrivals last month, has seen its deficit soar while the border with the Chinese mainland remains all but closed because of Beijing’s strict zero-Covid rules.

– Talent office –

Lee’s speech offered his blueprint for reversing that downturn, including a new talent scouting office, a HK$30 billion ($3.8 billion) fund to attract overseas businesses and new rules to make it easier to hire foreigners in 13 key professions.

The city will give preferential treatment to “top talent”, described as people who earn HK$2.5 million or more annually and graduates from the top 100 universities around the world who have relevant work experience.

Even with investor-friendly measures, rebooting Hong Kong will be tough.

Lee took office in July at a time of rising global interest rates, fears for China’s zero-Covid economy, uncertainty sparked by Russia’s Ukraine invasion and dents in Hong Kong’s business-friendly reputation.

Hong Kong’s stock exchange has lost more than a quarter of its value since the start of the year, one of the region’s worst performers. It was down 1.2 percent in Wednesday morning trade.

– ‘Stability is the prerequisite’ –

After nearly three years, the city is gradually moving away from its version of China’s zero-Covid policy, which failed to keep out the virus and has left the city internationally cut-off.

Authorities have axed the unpopular hotel quarantine for incoming travellers and loosened some social-distancing rules. 

But the pace of reopening still lags regional rivals such as Singapore — which has gone on its own charm offensive to lure talent and has roared back as a global transport hub.

Lee stressed that the government would press ahead with further national security legislation and possible new rules on “false information”. 

“The development of Hong Kong allows no delay. Social stability is the prerequisite for our development, and we have to get rid of any interference,” Lee said.

Many departing residents have cited the ongoing political crackdown as a primary reason for leaving.

Beijing imposed a sweeping national security law on Hong Kong in 2020 after democracy protests the year before, flipping the city’s once outspoken vibe and eradicating most dissent.

Most prominent local democracy activists either are in jail, are awaiting trial or have fled overseas while schools have been ordered to turn students into Chinese patriots.

Lee’s policy speech — which lasted two hours and 45 minutes — also included major infrastructure projects to boost the economy and plans to deliver more housing in a city with one of the world’s least affordable property markets, something successive Hong Kong administrations have failed to tackle.

Asian investors battled to push markets higher again Wednesday following another healthy run-up on Wall Street boosted by more positive earnings results that raised hopes for the reporting season.

However, while there is a more upbeat mood on trading floors for now, analysts warned that the current rally could soon turn as central banks press on with their interest rate hikes aimed at fighting multi-decade-high inflation.

Forex traders were also keeping tabs on the yen as it edges closer to 150 per dollar, with Japanese officials holding off a second intervention in as many months but saying they are ready to act when necessary.

All three main indexes in New York enjoyed back-to-back gains as investors were heartened by forecast-beating results from Goldman Sachs and Johnson & Johnson.

They came on the heels of better-than-expected reports from banking giants Citi, JP Morgan and Wells Fargo.

Traders were given an extra boost by news that Netflix gained more than two million subscribers in July-September, easing worries about the impact of rising borrowing costs on consumers.

“Earnings season offers investors the opportunity to focus more on the actual earnings power of corporate America, and less on the machinations of the backward-looking economic data stream,” Art Hogan, a strategist at B. Riley, said.

“A better-than-feared earnings season may well be the catalyst the market needs to see a break in the steady grind lower.”

Still, Asian markets were mixed in early trade, with profit-takers weighing on Hong Kong after a healthy three-day run-up, while there were also losses in Shanghai, Taipei, Manila and Jakarta.

Tokyo, Sydney, Seoul, Singapore and Wellington rose.

– ‘Volatility up’ –

SPI Asset Management’s Stephen Innes warned there were still plenty of issues keeping a cap on equities including sticky inflation, weak sentiment, hawkish central banks, the Ukraine war, China’s economic woes and “a non-stop drum beat of recessionary rhetoric from vocal market participants”.

“The key to equity markets is (Federal Reserve) certainty, and that is the crucial turn on the road before the rates markets can settle back into a groove and Treasury volatility can decline,” he added.

“But for that to happen, the US data needs to roll over. Given the much hotter-than-expected inflation data, the Fed may do the opposite of what the market wants — turning volatility up again.”

On currency markets, eyes were now on Tokyo as the yen hovers just above 149 per dollar, with finance minister Shunichi Suzuki saying “we’ll respond appropriately against excessive moves”.

The unit is much weaker than the 145.90 level it touched last month before authorities stepped in, and analysts said they would likely act before it passes 150.

“If dollar-yen rises past the symbolic 150 level, price action will naturally accelerate, so they probably want to halt it before then or buy time,” said Yuji Saito of Credit Agricole CIB. 

Crude rose on renewed supply worries, having slumped Tuesday on bets that US President Joe Biden will order the release of more barrels from emergency reserves in order to keep fuel prices subdued heading into the winter and mid-term elections.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 0.7 percent at 27,353.87 (break)

Hong Kong – Hang Seng Index: DOWN 0.8 percent at 16,781.79

Shanghai – Composite: DOWN 0.4 percent at 3,067.39

Pound/dollar: UP at $1.1344 from $1.1332 on Tuesday

Dollar/yen: DOWN at 149.17 yen from 149.21 yen

Euro/dollar: DOWN at $0.9859 from $0.9862 

Euro/pound: UP at 86.92 pence from 87.01 pence

West Texas Intermediate: UP 1.5 percent at $84.02 per barrel

Brent North Sea crude: UP 0.9 percent at $90.82 per barrel

New York – Dow: UP 1.1 percent at 30,523.80 (close)

London – FTSE 100: UP 0.2 percent at 6,936.74 (close)

After losing four relatives to respiratory illness, Zeina Matar fled her hometown north of Lebanon’s capital where she says a decaying power plant generates little electricity but very deadly pollution.

Thick black smoke sometimes billows from its red-and-white chimneys, leaving a grey haze in the air above the Zouk Mikael industrial district where the toxins remain trapped by a nearby mountain chain.

Zeina, aged 40, says she lost her younger sister and a cousin to pulmonary fibrosis and that two of her uncles died of lung cancer years earlier.

They all lived near the plant where, experts and residents believe, air pollution means people are more likely to develop cancer and respiratory disease than anywhere else in the crisis-torn country.

“We could die tomorrow,” said Zeina, who has relocated to Lebanon’s south to escape the plant’s emissions.

A Greenpeace study found that the surrounding Jounieh area ranked fifth in the Arab world and 23rd globally for cities most contaminated by nitrogen dioxide, a dangerous pollutant released when fuel is burnt.

The environmental group’s 2018 study singled out the Zouk plant, built in the 1940s, as well as cars on a busy motorway and privately owned electricity generators as the main causes of pollution.

The walls of Zeina’s balconies in her old Zouk Mikael home are blackened by the smoke, and laundry she used to hang outside would be damaged by toxic chemicals emanating from the plant, she said. 

“Whenever they refill the station with fuel oil, we would close the windows,” Zeina said. “The smell is unbearable.”

– Doctor says ‘I fled’ –

Lebanon’s economy has been in free-fall since a financial crisis hit late in 2019, with authorities now barely able to afford more than an hour of mains electricity a day.

The Zouk Mikael plant, one of the country’s largest, now runs at minimum capacity when it operates at all, but still its emissions are causing high rates of pulmonary disease, experts warn.

Among them is Paul Makhlouf, a lung doctor at the Notre Dame du Liban Hospital in Jounieh, who said he abandoned his local apartment after noticing a rise in respiratory disease among patients. 

In 2014, he found that lung ailments had increased by three percent in patients living near the plant compared to the previous year, an annual rise he estimates has now doubled.

“When I saw the results, I moved from there,” he said. “I fled.”

Makhlouf mainly blames the type of fuel burnt at the Zouk Mikael plant, which he says is rich in sulphide and nitric oxide — carcinogenic chemicals that affect the respiratory system and the skin.

Compounding the problem, he said, is the fact the seaside plant is located at a low altitude, with heavy smoke trapped in the densely-populated area by nearby mountains that overlook the Mediterranean.

– ‘Under black cloud’ –

Pictures went viral online last month of thick black smoke again billowing from the Zouk plant as it burnt low-quality fuel oil to produce just one hour of power that day.

The energy ministry said the plant had been forced to use heavy fuel to “keep supplying the airport, hospitals and other vital institutions” with electricity.

Since then, the plant has mostly operated at night.

“Sometimes, we wake up to a loud noise in the middle of the night” when the station kicks into action and burns fuel oil, said Zeina’s 80-year-old aunt Samia, who still lives near the plant. 

Elie Beaino, who heads the Zouk municipality, said a second plant, built without authorisation in 2014, runs somewhat more cleanly on higher-quality fuel or gas, but that it has stopped working as its operators cannot afford those higher-quality hydrocarbons.

“Most residents want the power plants to close down,” he said.

Lawmaker Najat Saliba, an atmospheric chemist, said residents near Zouk are at least seven times more likely to develop cancer than those of Beirut, citing a 2018 study she helped author for the American University of Beirut. 

She said the heavy fuel oil it uses releases harmful chemicals. “The solution is to import quality fuel oil and gas,” she said, adding however that Lebanon cannot afford those fuels.

“We have two options today,” she said. “To switch the lights off at the airport and in hospitals, or to sit under a black cloud in Zouk.”

Workers at an Amazon warehouse in the state of New York voted decisively against establishing a union, US officials announced Tuesday, dealing a setback to the fledgling labor drive at the e-commerce behemoth.

The tally was 406 against Amazon Labor Union’s (ALU) proposal and 206 in support of the organization, said a spokeswoman for the National Labor Relations Board.

The election marks the second straight defeat for the ALU, which surged to prominence in April following its upset win at a large Staten Island warehouse that voted to become Amazon’s first US facility to unionize.

ALU president Christian Smalls dismissed the vote at the Amazon facility near the city of Albany in New York state as unfair.

“It was a sham election where workers were subjected to intimidation and retaliation on a daily basis and even the workers who volunteered to be election observers were faced with threats of termination,” Small said in a statement.

Smalls said he was “proud of the brave workers in upstate New York who stood up in the face of a vicious anti-union campaign to challenge a trillion-dollar corporation.”

“We will continue to empower all workers to give them the right to unionize. You miss 100% of the shots you don’t take!” he added on Twitter.

Amazon, which has continued to contest its defeat in the first Staten Island vote, said it was pleased with Tuesday’s outcome.

“We’re glad that our team in Albany was able to have their voices heard, and that they chose to keep the direct relationship with Amazon as we think that this is the best arrangement for both our employees and customers,” said spokesperson Kelly Nantel. 

The elections at Amazon have come amid a wave of labor drives at consumer-facing companies, including Starbucks, Apple, REI and Chipotle, all of which have voted to unionize one or more store or restaurant. 

But Amazon’s initial victory in Staten Island, a New York borough, was on a much bigger scale, providing a jolt to the US labor movement while propelling Smalls and other ALU leaders to prominence. 

Smalls, a former Staten Island Amazon worker, and other current and ex-employees established the group  2021, denouncing Amazon’s rigid workforce practices during the pandemic and arguing a union was the way towards better pay and benefits.

But after prevailing in the 8,000 employee JFK8 warehouse, the ALU had also lost a second election in May at the smaller LDJ5 warehouse, which is also in Staten Island.

Besides trying to spread the ALU to new Amazon sites, the union’s leadership is also facing barriers in getting Amazon to come to the bargaining table to recognize the union and negotiate a contract.

Amazon has refused to accept the election outcome in the first Staten Island vote, citing alleged improprieties.

Last month, a National Labor Relations Board official rejected Amazon’s claims as groundless after a 24-day hearing.

But Amazon has said it plans to appeal that decision.